ST denies break up rumor

LONDON – STMicroelectronics (Geneva, Switzerland), Europe's largest chip manufacturer, has denied it is breaking up the company after reports appeared that such a move is being considered.

A Bloomberg report Friday (Oct. 12) said ST is considering splitting off its successful analog, mixed-signal and MEMS business from its struggling digital business. Such a move would likely include the sell off of ST-Ericsson, the subsidiary joint venture company that sells processors for mobile phones. The report cited unnamed sources "familiar with the matter."

In a statement ST said: "STMicroelectronics denies the existence of initiatives which can compromise the unity of the company. The company will announce its Q3 2012 results as planned on Oct. 23, 2012."

[Get a 10% discount on ARM TechCon 2012 conference passes by using promo code EDIT. Click here to learn about the show and register.]

ST earlier it would present a strategic plan for the company in December.

Bloomberg also reported that ST could still opt to retain its current structure. The report speculated that Samsung Electronics could be a potential buyer for ST's digital assets, and that ST-Ericsson could be included in such a sale.

ST's financial results and share price have suffered since the company attempted to create a mobile phone chip company out of assets assembled from ST, NXP Semiconductors and Ericsson. The ST share price jumped overnight to open at $6.01 on NASDAQ after closing at $5.64 on Thursday (Oct. 11).

The ST-Ericsson joint venture has lost money since its formation. ST's phone unit has been struggling with the decline of Nokia as a power in the mobile phone industry. Nokia is thought at one time to have generated as much as 25 percent of ST's revenue.

Any breakup of ST would need to be negotiated with the French and Italian governments which still own a significant minority share in the public company.

In my opinion it's time for ST to come back to the original company mission: technology innovation. I do not see any vision in Bozzoti's speeches. The management is playing with creative finance: breakups and carve outs. Time is up: next wrong step and ST will follow Nokia in its decline.

After the acquisition of NXP wireless and Ericsson mobile units, they do no know how to manage them. It shall be interesting to see if Samsung is interested to buy this money losing unit, some additional cuts will occur.